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Online luxury retailer Yoox Net-a-Porter predicts a richer future

(Bloomberg)—Yoox Net-a-Porter Group SpA forecast sales will increase as much as 20% a year as it adds private-label fashions as well as watches and jewelry to its online luxury offering.

The company also predicted widening profit margins and said it aims for positive cash flow from 2018 as it presented financial targets through 2020 in London on Wednesday. The shares rose as much as 6%.

“Overall, YNAP are expected to deliver on revenue expectations, while doing so more profitably than expected,” Exane BNP Paribas analyst Simon Bowler said in a note.

The projections further underpin the reasons behind last year’s combination of Yoox and Richemont’s Net-a-Porter as the company seeks to snatch market share from the likes of Amazon.com Inc., No. 1 in the Internet Retailer 2016 Top 500 Guide. Yoox CEO Federico Marchetti forecast in March that revenue will grow at a high-teens pace this year. That follows a 21% increase in 2015, when sales reached 1.67 billion euros. Yoox is No. 72 in the Top 500 and No. 27 in the Internet Retailer 2016 Europe 500 with $558.0 million in 2015 web sales.

Cie. Financiere Richemont SA, the parent of Net-a-Porter before the Yoox merger in October 2015, was ranked second among luxury websites in "Luxury on the Web," a special report from Internet Retailer, with $844.4 million in 2014 web sales.

The company said it will keep expanding and hiring in London even after the U.K. voted to leave the European Union. The decline in the pound versus the euro will have a neutral impact on profitability in 2016 and following years as its costs and revenue are ‘‘well-balanced,” the company said.

The operating margin should be 11% to 13% in 2020, compared with 8% in 2015, the company said in a statement. Profitability will be boosted as the company increases the proportion of private-label products and achieves cost savings from the merger.